The Commissioner Of Income-Tax Jalandhar v. M/S G.s. Auto Industries (P) Ltd., Sodal Road

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R. No.31 of 1998 DATE OF DECISION: 13.8.2009 The Commissioner of Income-tax Jalandhar ..........Applicant Versus M/s G.S. Auto Industries (P) Ltd., Sodal Road,..........RespondentJalandhar CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:-None for the applicant. Mr. Animesh Sharma, Advocatefor the respondent. **** ADARSH KUMAR GOEL, J. (Oral) 1.The Income Tax Appellate Tribunal, Amritsar Bench, Amritsarhas referred, in compliance of order of this Court, following substantialquestions of law arising out of its order dated 13.9.1990 in ITA No. 1116(ASR/1989) for assessment year 1988-89 for opinion of this Court:- “Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in deleting theaddition of Rs. 81,596/- made under section 40A (3)of the Income Tax Act, 1961, under the non-existentnature of the exceptional circumstances for makingthe payments in case; and (i) Whether there can assist any exceptional andunavoidable circumstances for one singleunledgerised payment to a party with whom theassessee is having a running account and making allother payments by cheques” (ii) Whether mere genuineness of payment is enoughto take the case out of the perview of section 40A(3);and (iii) Whether the I.T.A.T. can substitute its ownsatisfaction, when the law requires the satisfaction ofthe Assessing Officer for allowing the amountsexceeding Rs.2,500/-?” 2.The assessee was engaged in the business of manufacturingand trading of auto parts and hardware fittings. The Assessing Officerfound certain expenses incurred in excess of Rs. 2500/- without chequesand the same were disallowed under Section 40A(3). The additions wereupheld by the CIT(A) except for some amount. On further appeal, theTribunal deleted the additions by observing that payments had to be madeout of necessity in cash in exceptional circumstances and in such asituation Section 40A(3) could not be invoked. 3.The Tribunal has recorded a categorical finding that cashpayment had to be made in exceptional circumstances and payments wereproved to be genuine. Finding of the Tribunal cannot be held to beperverse. Requirement for payment by cheque under Section 40-A(3) isnot absolute and in exceptional circumstances, genuine cash transaction ispermissible. 4.In view of above, the questions referred are answered againstthe revenue and in favour of the assessee. 5.Reference is disposed of accordingly. (ADARSH KUMAR GOEL) JUDGE August 13, 2009(DAYA CHAUDHARY)poojaJUDGE Note:-Whether this case is to be referred to the Reporter .......Yes/No